INTRODUCTION

The essence of inflation is that the money supply exceeds the amount of money needed circulating
in the economy. After all, it's because the central bank pumps more money into the economy at
interest rates lower than the economy deserves. This amount of excess money with low interest
rates is not immediately reflected in the price increase because the price expectations of market
participants have not changed. Over time, however, some sectors of the economy will spot this
excess and start raising prices. If the growth rate of the money supply continues for a sufficiently
long time, the price increase will spread to the entire economy, creating price inflation.

Since currency inflation lags behind the rise in prices of all consumer goods, it is easily misused by
governments to serve their political ends. That's why Fredrich von Hayek, the brilliant economist
who won the Nobel Prize in monetary theory in 1974, likened inflation to opium.

The relationship between money supply (M2) growth and Vietnam's inflation (see chart) shows that
Vietnam has abused money issuance to support growth for a long time. In the years 2002-2006
the increase in the money supply did not lead to higher prices, causing the growth rate of the
money supply to increase, from an average of about 20% in 2002-2003, to 25% in 2004-2005,
then 35% in 2006, and in 2007 exceeded 40%. Since 2007, inflation has started to accelerate and
the government has implemented policy tightening three times and then twice had to expand
the money supply to support growth. This shows that once inflation takes place, a cure is very
difficult.

In economic management, the government always pays attention to and makes great efforts to
control inflation at a reasonable level while ensuring sustainable economic growth. Therefore,
inflation during the period of 2007 - 2012 attracted the attention of economic researchers and
the public. In this essay, I will present the causes, solutions, and prospects for inflation in 2024

Contents
CHAPTER 1: INFLATION IN VIETNAM IN THE PERIOD 2007-2012:................................................................1
1 INFLATION:............................................................................................................................................1
1.1Definition:.......................................................................................................................................1
1.2.Inflation classification:...................................................................................................................2
1.3. Inflation measurement and inflation measurement indicators:...............................................2
2. CURRENT SITUATION OF INFLATION IN VIETNAM IN THE PERIOD 2007-2008.....................................4
3. CURRENT SITUATION OF INFLATION IN VIETNAM IN THE PERIOD 2009-2010.....................................6
4. CURRENT SITUATION OF INFLATION IN VIETNAM IN 2011-2012.......................................................13
CHAPTER 2. CAUSE:...................................................................................................................................14
1.CAUSES FROM THE GLOBAL ECONOMY..............................................................................................14
2. INTERNAL CAUSES OF VIETNAM'S ECONOMY....................................................................................15
CHAPTER 3: SOLUTION..............................................................................................................................18
CHAPTER 4 . ASSESSMENT OF THE INFLATION OUTLOOK IN 2024 IN VIETNAM........................................20

CHAPTER 1: INFLATION IN VIETNAM IN THE PERIOD 2007-2012:

1 INFLATION:
1.1Definition:
Inflation is an increase in the general price level of goods and services over time and the
depreciation of the value of a currency. When compared to other countries, inflation is the
depreciation of one country's currency relative to another's currencies

Inflation is characterized by the inflation index. It is nominal GNP / actual GNP. In practice it is
replaced by the consumer price ratio or wholesale price index Ip = aip.d

IP: Price index of each type of commodity group

d: Proportion of consumption of each type of goods.

In economics, the term "inflation" is used to refer to the increase over time in the overall price
of most goods and services compared to a year earlier. Thus, inflation is assessed by comparing
the prices of two goods at two different times, assuming the quality does not change.

In an economy, inflation is the loss of market value or a decrease in the purchasing power of a
currency. When compared to other economies, inflation is the depreciation of one currency
relative to other currencies.

1.2.Inflation classification:

- Deflation: the inflation rate is negative and easily mistaken for deflation.

- Moderate inflation: the level of inflation corresponds to a price growth rate of 3 to 10% a year,
also known as single-digit inflation. Moderate inflation causes prices to fluctuate comparatively.
During this period, the economy functions normally, the life of workers is stable. That stability is
manifested: prices increase slowly, deposit interest rates are not high, do not occur with the
situation of buying and selling and hoarding goods in large quantities... It can be said that
moderate inflation creates peace of mind for workers who only rely on income. During this time,
business firms with stable income, low risk should be willing to invest in production and
business.

- Galloping inflation: the level of inflation corresponds to a relatively rapid rate of price growth
at a rate of 2 or 3 figures a year, but is still lower than hyperinflation. At galloping levels,
inflation causes general prices to rise rapidly, causing great economic volatility, contracts are
indexed. At this time, people hoarded goods, gold, silver, real estate and never lent money at
normal interest rates.
 In general, galloping inflation maintained for a long time will cause serious economic distortions.
In that context, the currency will depreciate rapidly, so people only keep the minimum amount
of money just enough for daily transactions. People tend to hoard goods, buy real estate, and
turn to gold or hard currencies as a means of payment for high-value transactions and wealth
accumulation.

- Hyperinflation: Hyperinflation is "out of control" inflation, the speed of money circulation

increases dramatically, prices rise rapidly unstable, real wages are sharply reduced, currency
depreciates rapidly, information is no longer accurate, market factors are distorted and business
activities are in turmoil. However, hyperinflation occurs very rarely.

There is no precise definition of hyperinflation. A classic definition of hyperinflation given by

American economist Phillip Cagan is a monthly inflation rate of 50% or more (that is, prices
double every 31 days).

1.3. Inflation measurement and inflation measurement indicators:

 . Inflation measurement:

Inflation is measured by tracking changes in the prices of large amounts of goods and services in
an economy (usually based on data collected by state institutions, although labor unions and
business journals also do this). The prices of goods and services are combined to give an average
price, called the average price of a set of products. The price index is the ratio of the average
price at the present time to the average price of the corresponding group of goods at the time
of origin. The inflation rate expressed in the price index is the percentage of the increase in the
current average price compared to the average price at basepoint.

To make it easier to think of price as a measurement of the size of a sphere, inflation would be
the increase in its size.

- There does not exist a single accurate measurement of the inflation index, since the value of
this indicator depends on the proportion that one assigns to each commodity in the index, as
well as on the scope of the economic sector in which it is made. However, the most common
measure of inflation is the CPI, a consumer price index that measures the prices of a large
number of different goods and services, including food, food, payment for health services, etc.,
which is mya by the "average consumer."

 Inflation measurement indicators:

- The cost of living index (CLI) is a theoretical increase in an individual's cost of living relative to
income, in which the consumer price index (CPI) is assumed approximately. Economists debate
whether or not a CPI can be higher or lower than the CLI intended. This is seen as a "bias" in the
CPI range. CLI can be adjusted by "purchasing power parity" to reflect differences in the prices of
land or other goods in the region (which fluctuate greatly from world prices in general).

- The Consumer Price Index (CPI) measures the prices of goods or purchases by "ordinary
consumers" selectively. In many industrialized countries, annual percentage changes in these
indicators are the usual inflation numbers. These measurements are often used in the transfer
 of wages, as workers expect to have their (nominal) pay increase at least equal to or higher than
the rate of increase in the CPI. Sometimes, employment contracts take into account cost-of-
living adjustments, implying that the nominal payment will automatically increase with the rise
of the CPI, usually at a slower rate than real inflation (and also only after inflation has occurred).

- The Producer Price Index (PPI) measures the price that manufacturers receive without taking
into account additional dealer prices or sales tax. It differs from CPI in that price subsidies,
profits and taxes can result in the fact that the value received by producers is not equal to what
consumers have paid. Here there is also a typical delay between an increase in PPI and any
increase arising by it in CPI. A lot of people believe that this allows for an approximate and
pretentious prediction of "tomorrow" CPI inflation based on "today" PPI inflation, although the
composition of the indicators is different; One of the important differences to take into account
is the services.

- The wholesale price index selectively measures changes in the prices of wholesale goods
(usually before a taxable sale). This indicator is very similar to PPI.

- The commodity price index selectively measures changes in the prices of commodities. In the
case of the gold standard, the only commodity used is gold. When the United States uses a
bimetallic standard, the index includes both gold and silver.

- GDP deflator index based on the calculation of gross domestic product: It is the ratio of the
total value of real price GDP (nominal GDP) to the total GDP value of the base year, from which
it is possible to determine the GDP of the reporting year at comparable prices or real GDP.

2. CURRENT SITUATION OF INFLATION IN VIETNAM IN THE PERIOD 2007-2008

Vietnam's inflation index accelerated to 12.6%, much higher than the growth estimate of 8.44%
in 2007. It can be said that higher food and fuel prices are the reason for the increase in the
consumer price index at 12.63%. At the same time, the retail price in Vietnam of gasoline also
increased sharply
In 2008, Vietnam's GDP was continuously revised down, but could not reach the finish line.
Vietnam's GDP growth rate is 6.23%, the inflation index is at a record 19.9%, the highest in a
decade.

- The inflation rate is at its highest level since 1991, when Vietnam faced financial difficulties.
Experts warn that inflation in the whole of 2008 may reach over 30%, the Ministry of Planning
and Investment of Vietnam predicts that the inflation figure for the whole year will be about
25%.

-According to the General Statistics Office, the inflation index started in 2008 with the CPI in
January of 2.38%, showing signs of high inflation in 2008, inflation began to increase abnormally
in March 2008 increased by 2.99% (February increased by 3.56%).

-Among the groups of goods and services this month increased sharply pushing up prices: food
groups increased by 10.5%, transportation, post office increased by 5.76%, housing and
construction materials increased by 3.55%, other groups of goods and services only increased at
0.3-1.5%.

- The April 2008 consumer price index was lower than the previous month's gains but still rising
and many items stood at high prices. Market prices are complicated. Consumer prices in May
2008 compared to the previous month increased by 3.59%, the highest increase in the first 5
months of 2008.

- Consumer prices in June 2008 slowed down, at an increase of 2.14% over the previous month.
Consumer prices in July increased by 1.13% compared to June. Official statistics estimate
Vietnam's inflation rate in July at 27.04%, although it does not account for the impact of the
recent increase in gasoline prices.

June's inflation rate was 26.8%. However, the General Statistics Office of Vietnam said that the
rate of price growth in July has decreased, the consumer index (CPI) increased by 1.13%
compared to June. This is the lowest increase since the beginning of the year.

- Food prices in June decreased by 0.37% compared to June, as rice crops are underway

rice.

-According to the General Statistics Office, food and food service groups, beverages and

cigarettes, garments, headwear, shoes... all continued to decline sharply compared to the
previous month.

- The increase in consumer prices in September slowed down on the one hand because the
prices on the world market of some imported goods of our country have decreased and
domestic agricultural production has been harvested, but the most important factor is due to
the efforts of all levels of sectors in implementing 8 groups of government solutions. Consumer
prices in December 2008 compared to November decreased by 0.68%.

Inflation really exploded and really caused macro turmoil in 2008. Inflation peaked in July 2008
when it reached over 30% (YoY). By the end of 2008, inflation had fallen to 19.89 percent, the
highest level in 17 years. In which, the CPI of food increased the highest and reached 49.16%.
 In May 2008, one-month CPI increased by nearly 4%, which was the time of a spike in food
prices (food CPI increased by 22.19%). Earlier, in March 2008, inflation also increased by 3.56%
compared to the previous month. On average in the first 6 months of 2008, inflation amounted
to 2.86% per month.

-The SBV's tightening monetary policies, the government's measures to control inflation and
since September 2008, the financial crisis from the US began to spread globally, causing prices of
many goods to fall sharply, so that inflation since September has decreased sharply compared to
previous months. In 3 consecutive months of October, 11 and 12/2008, CPI grew negatively.

3. CURRENT SITUATION OF INFLATION IN VIETNAM IN THE PERIOD 2009-2010

In the early months of 2009, inflation was no longer a concern. On average, in the first 7 months,
inflation only increased by 0.45%/month. The consumer price index in 2009 also increased more
slowly than in previous years, without mutations or irregularities. Inflation for the whole year
2009 was officially announced as 6.88%

Year 2009

In the early months of 2009, inflation was no longer a concern. On average, in the first 7 months
of the year, inflation only increased by 0.45% per month, compared to December 2008 to July
2009, inflation only increased by 3.22%, of which food decreased by 0.33%.

- CPI in 2009 has a slower increase than previous years, without major spikes that are not
abnormal in law. Inflation for the whole year 2009 was officially announced as 6.88%.
- In January 2009, CPI increased slightly by 0.32% mainly due to psychological factors, consumers
accepted higher prices in the month surrounding Lunar New Year. In February, CPI increased by
1.17% due to the Tet and January full moon holidays, dragging the prices of food, food and
many goods and services simultaneously to high levels.

- The USD price index has increased by 10.7% in 1 year, as of December 2009, putting enormous
pressure on the prices of imported goods and items using imported raw materials.

Figure 1: CPI movement chart in 2009

Source: General Statistics Office

As a rule, prices of some essential goods usually rise in price before the Lunar New Year. This
increase pushed the December food commodity price index up 6.88% from the previous month
and up 4.57% from 2008.

-Food items compared to the previous month did not increase sharply but compared to the year

2008 again had a high increase of 8.39%.

-The increase of these two items brought the price index of food and food services in December
sharply increased at 2.06%. Compared to last year, the increase was 8.71%.

The group of housing and building materials including rent, electricity, water, fuel and building
materials in December also increased at 1.4%. Compared to 2008, this increase is lower than
some other commodity groups.

-Beverages, tobacco increased by 0.97%, apparel, headwear and footwear increased by 0.81%.
Some other groups did not have a high increase, reaching between 0.07 and 0.25% such as
culture, entertainment, appliances and household appliances.
-Among 11 groups of essential consumer goods and services, in December and the whole year
2009, the Post and Telecommunications group decreased by 0.11%.

The gold price index alone in the past month has increased by 10.49%, bringing the whole year
up 19.16% compared to 2008. The US dollar index in December increased by 3.19%, bringing the
figure for the whole year 2009 to 9.17% compared to 2008. This increase has also been forecast
by experts since the beginning of the year. However, with the current stabilization policies, it is
forecast that the gold price index will be in a more stable circle in the coming months.

-Some experts said that the price index in 2009 is within the expected level, but there are still
some concerns because, compared to the same period last year, some essential goods are still
tending to increase, from 8.53 to 9.56%.

Monthly inflation in 2009

The economic crisis of 2008-2009 has contributed to the reduction of inflation in Vietnam since
the end of 2009, the fall in international prices along with the decrease in aggregate demand has
helped Vietnam reverse the ominous trend compared to 2008.

Year 2010

The CPI movement in 2010 was created by the difference between the peak and trough months
of more than 1.5%, quite similar to 2007. The two highest gains were made up of February's and
December's approximate 2% increases.

- Tet Canh gradually falls in early February 2010, the CPI increases in the first two months of the
year are above 1% and approaching 2%, but the difference this year falls in March when the
consumer price index did not fall as sharply as in previous years.

In 3 months began to have mutations:

+ SBV announced VND/USD exchange rate increased by 2% at a ceiling price of 19,000

+ Simultaneously applied from March 1: the price of coal sold for electricity increased by up to
47% depending on

Electricity prices increased by 6.8%, clean water prices in Ho Chi Minh City increased by about
50%.

+ Another impact that greatly affects prices and people's psychology, right before the day when
employees return to work after the long Tet holiday, noon February 21, gasoline prices were
suddenly adjusted to increase by about 3.6%.

+ Following these developments, gas, cement, iron and steel ... also pull each other up

+ Immediately after that, from March 15, information about the possibility of CPI in the month
after Tet

The high rise was predicted early by some sources. The official figure then pegged the increase
at 0.75%, just behind the 2008 spike but comparable to 2004 and 1996.

-The target set by the Government at this time is to stabilize the economy, especially to curb
inflation, the growth of the money supply for the whole year is limited to 20% compared to the
end of 2009; credit growth of 25%.

- Contrary to the inference that for about 5 months from April to August, the consumer price
index continuously increased very low, close to 0% (July only increased by 0.06% compared to
June). In terms of altitude, these increases set a record for low elevation since 2004.

+ The sudden increase in purchasing power reflected in the total retail sales went up in April and

by May reached an increase of nearly 27% over the same period.

+ The growth rate goes down gradually, and by October 2010, the value of public production

Karma was down 3.4% from September.

- In the last 4 months of the year, the consumer price index continuously remained high. Have

Up to 3 months of record elevation, showing that the heat of inflation is near.

+ On August 9, gasoline prices after a long time were kept fixed adjusted to about 2.5%, pushing
September CPI into a new round of challenges.

+ On August 18, the State Bank continued to adjust the average interbank exchange rate
between VND and USD to VND 18,932 (up nearly 2.1%) and kept the exchange rate band +/-3%.

+ The 1000th anniversary of Thang Long - Hanoi lasting 10 days also significantly affects the
consumer price index in October. In addition, continuous flooding in the Central region prolongs
the chain of impacts on the consumer price index at the end of the year.

+ Around the middle week of October, the market again recorded escalations of

gold and USD prices, amid the CPI trend has started to climb.
+ Monetary policy has been looser, industrial production value in November

was up 4.9% from October and is expected to be about 6% more than the previous month. The
inventory index of the processing industry also gradually decreased to the level 28% increased
over the same period.

+ Inflation is forecast to remain low in the context of excess production capacity and high
unemployment. The recovery in commodity prices has increased the consumer price index on a
global scale. It is estimated that developed country inflation will rise to 1.4% in 2010 from 0.1%
in 2009; inflation in emerging and developing countries stood at 6.2% from 5.2% in 2009; In
developing Asia, inflation is expected to rise to 6.1% from 3.1% in 2009 (Figure 3)

Inflation in developed, emerging and developing countries,

developing Asia and Vietnam (annual average)

Source: World Economic Outlook, IMF, 10/2010

-In 2010, the consumer price index increased by 11.75% compared to December 2009, far
exceeding the inflation target adopted by the National Assembly at the beginning of the year by
no more than 7% and the Government target adjusted by no more than 8%. In which, the group
of food and food services increased by 16.18%, with the power of 39.93%, this group
contributed to the overall increase of CPI about 6.46%, more than half of the CPI increase of the
whole year. Next is the group of housing, electricity, water, fuel, construction materials, up
15.74%, with the right number
 10.01%, this group contributed to an increase in the overall index by about 1.57%. The
education group had the highest increase of 19.38%, with a large zero at 5.72%, but this group
contributed an increase of about 1.1% to the overall increase in CPI.

Movement of CPI by month in the period 2008 – 2010

Source: General Statistics Office

In general, in 2010, CPI movements were almost paralleled by macro policy changes and market
interventions from authorities. The approaching New Year's Day also leaves a year of inflation
falling short of targets, but there are still speculations about the direction of policy adjustments
that could emerge early next year.

4. CURRENT SITUATION OF INFLATION IN VIETNAM IN 2011-2012

In 2011:

Foreign and domestic media and international financial and investment agencies have since the
beginning of the year talked a lot about severe inflation in Vietnam. In all East and Southeast
Asia except Vietnam, inflation is very low, 1% in Taiwan, 1.7% in Malaysia, 3.3% in Thailand and
as high as 6% in Laos. According to a report from IMF Data, the average growth rate of CPI in the
period 2006-2010 was at 11.48%, much higher than the increase in CPI of previous periods. In
December 2011, Vietnam's inflation was officially announced at 18.13%, the highest since 2008.
This is also the highest level compared to other countries in the ASEAN region. The reason for
high inflation is forecasted to be the high prices of raw materials such as gasoline, oil (+20%),
electricity (+15.28%), the USD/VND exchange rate increased sharply (+9.3%), adjusted interbank
interest rates, making April CPI compared to the previous month reached a record of 3.32% and
August CPI compared to the same period last year reached the highest level (23.02%)
 2012

As forecasted by many organizations, Vietnam's inflation this year only increased by 6.81%, much lower
than the threshold of less than 10% that the Government targeted.

According to the General Statistics Office, the consumer price index (CPI) in December this year
increased by 0.27% compared to November and increased by 6.81% compared to December 2011. The
average CPI in 2012 increased by 9.21% compared to the average in 2011.

In December compared to November, the group of apparel, headwear and footwear increased the most, up
to 1.17%. Other groups of goods and services that increased higher than the overall increase but were also
below 1% were appliances and household appliances up 0.59%, culture, entertainment and tourism up
0.34%, beverages and tobacco up 0.32%.

The group with the largest proportion in the "basket" of goods calculated CPI is food and food services
with only a modest increase of 0.28% (Food increased by 0.13%; food increased by 0.28%; eating out of
the family increased by 0.4%).

"Sensitive" commodity groups, which had a strong impact on CPI in previous months, rose lower this
month than the overall increase. That is, housing and construction materials only increased by 0.15%, the
education group increased by 0.09%, of which, educational services increased by 0.05%, the transport
group decreased by 0.43%...

After two consecutive months of record increases of 10-20%, the Government requested to extend the
time to increase hospital fees, medicines and medical services only increased by 0.14%, of which,
medical services increased by 0.03%.

Looking back at 2012, the General Statistics Office assessed that inflation this year was only "marginally"
higher than the increase of 6.52% of 2009 – the year of strong economic decline and much lower than the
increase of 11.75% of 2010 and the increase of 18.13% of 2011.

Although far from the original CPI target, 2012 was still a year of unusual price fluctuations.

The agency analyzed that CPI increased not too high in the first two months of the year (up 1.0% in
January and up 1.37% in February) but the highest increase in September with an increase of 2.20%. This
is a month dominated by medicines and health services and education groups.

After that, the increase in the consumer price index slowed gradually in the last months of the year.
During the year, up to 7 months CPI increased by less than 1% and most months increased by less than
0.5%. Another unusual thing about the domestic price market this year is that CPI does not fall after the
Lunar New Year but decreases in the two months between the year (June and July).

The gold price index in December 2012 increased by 0.46% over the previous month; an increase of 0.4%
compared to December 2011. The US dollar price index in December 2012 increased by 0.03% compared
to the previous month; down 0.96% compared to December 2011.

GDP lower than forecast

GDP growth next quarter is always higher than the previous quarter. In which, the first quarter increased
by 4.64%, the second quarter increased by 4.80%, the third quarter increased by 5.05% and the fourth
quarter increased by 5.44%

Compared to 2011, GDP this year has decreased by 0.86 percentage points. However, the General
Statistics Office said that in the context of the world economy facing difficulties, the whole country
focused on implementing the priority goal of curbing inflation and stabilizing the macroeconomy, such an
increase is reasonable.

Of the 5.03% overall growth of the whole economy, the agriculture, forestry and fishery sector increased
by 2.72%, contributing 0.44 percentage points to the overall growth;, the industry and construction sector
increased by 4.52%, contributing 1.89 percentage points, the service sector increased by 6.42%,
contributing 2.7 percentage points.

Earlier, the Minister of Planning and Investment said that with this growth rate, the target of 6.5-7% as
planned for 5-year socio-economic development 2011-2015 will be difficult to achieve.

In 2011, GDP was only 5.89%, the plan for 2013, GDP is forecasted at about 5.5%. For the remaining 2
years, 2014-2015, the average GDP must reach 8-9%, the average GDP in the 5-year period 2011-2015
will reach the above target.

At the workshop in early December, the National Center for Socio-Economic Information and Forecast of
the Ministry of Planning and Investment commented that, thanks to growth efforts in the last two quarters
of the year, full-year growth did not decrease sharply in speed. However, the economic growth rate in
2012 still decreased for the second consecutive year.
Since about 20 years, this growth rate is only higher than in 1999 and 2009, at 4.77% and 5.01%,
respectively. These were two years when the economy suffered many negative effects of the world
economy due to the impact of the Asian (1997) and global (2008) financial crises.

The center also said that although economic growth is not the No. 1 priority in the 2012 target, it is still
too low compared to the initial target of 6%, lower than the medium-term target (6.5% in the five-year
plan 2011-2015) and low compared to the average GDP growth during the typical period The world
succeeds in escaping the middle-income 'trap'.

CHAPTER 2. CAUSE:
What causes inflation is a common question and one that everyone asks but has yet to find an
answer, even economists who disagree on it. There are many theories to explain what causes
inflation but below will be the main theories to clarify the above. To analyze the causes leading
to the explosion of inflation index in Vietnam, it can be divided into two main groups of causes:
caused by the impact of the global economy and caused by internal problems

1.CAUSES FROM THE GLOBAL ECONOMY

first, Oil prices and input prices have continuously increased For 4 years, from 2003 to 2006, the
global economy continued to grow high, especially in the group of emerging countries= in Asia
such as China, which pushed up global energy demand, along with instability and military
political conflicts in the Middle East are the direct causes of oil prices to unprecedented highs: $
110 / barrel in March 2008, at the same time the price of other input materials such as iron and
steel, fertilizer, cement also continuously increased.

The second reason: World food prices are continuously increasing sharply Due to the impact of
global climate change, natural disasters, epidemics continuously occurring while the global
economy still pursues growth goals with the implementation of industrialization, causing arable
land, Livestock is shrinking. The above reasons cause food production to decrease. At the same
time, soaring energy prices have prompted some grain-producing countries to switch to fuel
exports, causing food supplies to shrink

third: Large amounts of money are injected into the global economy The implementation of
monetary tightening through raising key interest rates along with the continued rise in oil and
food prices was the underlying cause that pushed the global economy into recession in the first
months of 2008. which manifested itself as the U.S. subprime debt crisis that began in July 2007.
With inflation rising and the global economy slipping into recession, central banks have no
choice but to inject huge amounts of money to save the economy. Central banks of the US,
Europe, Japan and the UK must also send large amounts of money to save the economy as well
as the banking system
2. INTERNAL CAUSES OF VIETNAM'S ECONOMY
Reason One: Foreign capital inflows into Vietnam increased sharply Starting at the end of 2006
when Vietnam officially became a member of the World Trade Organization (WTO), along with
reforms in policy mechanisms and investment environment, foreign capital inflows into Vietnam
have increased sharply. In 2007, FDI inflows increased by 20.3 billion USD of registered capital,
much higher than 10.2 billion USD in 2006, especially indirect investment inflows increased
strongly to over 6 billion, 5 times higher than the figure of 2006 but mainly poured into the stock
market. Facing this context, the State Bank had to provide a large amount of VND to buy foreign
currency in order to stabilize and slightly devalue the exchange rate to support exports, promote
economic growth and this made the total means of payment increase, the impact of rising
inflation.

Reason 2: Rising production costs The context of rising global inflation has affected to increase
the price of most of Vietnam's import groups such as petroleum, iron and steel, fertilizer,
pesticides – which are the main input materials, playing an important role in the production
chain of industries in Vietnam. Although the Government has tried to control gasoline prices,
from the beginning of 2007 to the end of the first quarter of 08, gasoline prices have had to be
adjusted 4 times, in general, gasoline prices have increased by 38%

Third reason: High food prices In July 2007, Central Vietnam suffered many consecutive storms,
along with many diseases in livestock and cultivation such as bird flu, blue-eared pigs,... causing
a lot of damage, causing the supply of food and food to be reduced. Although the Government
has issued a number of dispatches to control the maximum amount of rice exported to control
inflation and ensure food security in the country, the increase in world food prices has caused
the export price of rice and the price of some other exported food items such as seafood to
increase along with production costs The high price of domestic food in the first quarter of 2008
increased 5 times higher than the increase of the first quarter of 2007, while this group
accounted for 42.85%, the largest in the CPI basket, which can be said to be the main reason for
the sharp increase in CPI.

Reason Four: Fiscal policy and monetary policy continuously expanded in the period 2001-2006
to promote economic growth This is considered an important reason for great pressure to
increase inflation in Vietnam. By 2006, Vietnam was continuously growing at a very high rate of
over 8%, and the goal of this period for the Government of Vietnam was to prioritize economic
growth. This goal has encouraged the easing of fiscal policy, monetary policy aimed at boosting
economic growth. This is also a contributing factor to the average inflation from 2005 to 2007
increased above 8.01%. In addition, an important reason for the increase in the total means of
payment in the economy is the sharp increase of bank credit in the process of serving the goal of
economic growth. Banks expand credit by easing lending conditions, compete with each other
by reducing lending interest rates, increase deposit rates to seek loan capital, transform models,
enter into joint ventures with enterprises and corporations to increase charter capital, expand
networks quickly beyond management capacity, The establishment of new banks and all major
banks raced to seek profits from lending operations, which increased the credit of the banking
system during 2007 and the first 3 months of 2008.

Reason Four: Foreign capital inflows into Vietnam increased sharply Starting at the end of 2006
when Vietnam officially became a member of the World Trade Organization (WTO), along with
reforms in policy mechanisms and investment environment, foreign capital flows into Vietnam
have increased sharply. In 2007, FDI inflows increased by 20.3 billion USD of registered capital,
much higher than 10.2 billion USD in 2006, especially indirect investment inflows increased
strongly to over 6 billion, 5 times higher than the figure of 2006 but mainly poured into the stock
market. Facing this context, the State Bank had to provide a large amount of VND to buy foreign
currency in order to stabilize and slightly devalue the exchange rate to support exports, promote
economic growth and this made the total means of payment increase, the impact of rising
inflation.

The most important factor is the monetary factor when funds are not used effectively. The
impact of this cause was more pronounced when inflation spiked again in 2011. The inefficient
 use of funds is a consequence of excessive public investment. Because the state has engaged in
too much economic activity, it has sometimes encroached too much on the private sector. With
public sector spending in the years 2010-2011 consistently at 35-40% of GDP and state
investment equal to about 20% of GDP (half of total social investment) is too high. The
misalignment of capital in the corporate sector (market) also has an impact on increasing the
inflation rate. A look at the economy reveals that state-owned enterprises and some large, well-
connected private enterprises are favored in capital allocation. For some large private
enterprises, many of them mainly focus on trading activities of asset types (real estate,
securities ...) or searching for national resources, rather than focusing on production and
business activities that create more added value for the economy. It is worth noting that most of
these businesses not only have their own banks or financial institutions, but also have close ties
with many large banking and financial institutions or other relationships. This makes relational
loans more common, and a significant portion of capital is put into speculative businesses that
pose risks rather than create added value for the economy. Of course, small and medium
enterprises, the main object of job creation and growth engine of Vietnam in recent years, have
been and will be pinched and difficult to access capital, so they may have to shrink production or
just hold out for the past day. The pursuit of a policy of stabilizing the currency exchange rate in
the context of high inflation has reduced the competitiveness of Vietnamese enterprises. High
inflation and rigid exchange rates will make goods of Vietnamese enterprises (including
domestic consumption and export) more expensive than imports. This means that a smaller
amount of goods will be produced in the Vietnamese economy and the competitiveness of
Vietnamese businesses will be reduced. The imbalance and lack of coherence in such
governance policies has led to a double imbalance in the economy that is manifested by the
persistent and exacerbated trade deficit, the budget deficit is always persistent and exacerbated
along with very high inflation

CHAPTER 3: SOLUTION
Our country entered into the implementation of the socio-economic development plan in 2008
in the context of complicated and unpredictable fluctuations in the world economy. Facing that
situation, the Government has agreed to define the key tasks in the current situation: striving to
curb inflation, stabilize the macroeconomy, ensure social security and sustainable growth. In
particular, curbing inflation is a top priority goal. Because, if inflation cannot be controlled, it will
not only affect production development and people's lives, macroeconomic stability, but also
affect economic growth in the medium and long term, employment will also decrease, and the
business investment environment will also become worse.

SOLUTIONS OF THE GOVERNMENT AND THE STATE BANK

First, implement tight monetary policy. Although due to many reasons, inflation always has
monetary causes. The continuous increase in the money supply in circulation and credit
balances from 2004 over the years and increased in 2007 is an important cause of inflation.
Recognizing that situation, the Government advocated strict control of total means of payment
and total credit balance right from the beginning of the year. The State Bank, through proactive
and flexible use of monetary policy instruments according to market principles, aims to achieve
this requirement. It should be emphasized that while resolutely tightening the currency, it is
 necessary to ensure the liquidity of the economy and the activities of banks and credit
institutions, creating conditions for the production of goods and exports to develop.

Second, cut public investment and recurrent costs of budget-using agencies, strictly control
investment of state-owned enterprises, and try to reduce the budget deficit rate. Investment
from the state budget and investment from state-owned enterprises currently accounts for
about 45% of total social investment. Cutting this investment source will reduce pressure on
demand, reduce trade surplus, and contribute to improving the efficiency of the economy. The
Government will specify the proportion of investment capital and administrative costs to be
reduced and request ministries and localities to identify inefficient works and works that are not
really necessary to make appropriate adjustments.

Third, focus on developing industrial and agricultural production, quickly overcome the
consequences of weather and epidemics to increase food production. At that time, our
country's growth potential was still huge, especially when Vietnam was a full member of the
World Trade Organization, foreign investment and private investment increased sharply, export
markets were expanded, so production development was the original solution, creating
multifaceted efficiency, both increasing supply for the domestic market and exporting,
contributing to curbing inflation, reducing trade surplus, promoting economic growth, without
causing side effects. This requires drastic and timely direction to remove difficulties and
obstacles in capital, market, administrative procedures, and promote production development.

Fourth, ensure balance between supply and demand of goods, promote exports, and reduce trade
deficit. The Government continues to work with industry associations and businesses dealing in essential
goods, such as food, medicine, gasoline, iron and steel, construction materials, and fertilizers. .. assign
tasks to these units to ensure the supply of goods, and at the same time have the responsibility to work
with the Government to control prices. In the context of the US Dollar depreciating compared to the
currencies of countries that are major export markets of our country, anchoring the exchange rate
between the Vietnamese currency and the US Dollar for too long does not reflect the true relationship.
real in the foreign exchange market. Therefore, the Government advocates applying flexible exchange
rates with appropriate ranges, reflecting the supply and demand relationship in the market, helping to
control inflation but not greatly affecting exports, ensuring purchases and sales. , foreign currency
conversion takes place smoothly. To keep the trade balance balanced, the Government is directing the
drastic implementation of many solutions: The State Bank ensures enough capital and buys all foreign
currency for businesses that export goods, and immediately resolves bottlenecks. on export credit for
each specific case; increase support for trade promotion for export goods; Strongly reform
administrative procedures related to export activities to reduce costs for businesses, contributing to
improving the competitiveness of Vietnamese exports along with the application of technical barriers
and other measures. Other measures consistent with our country's international commitments to
reduce trade deficit, including increasing import taxes on non-essential goods.

Fifth, thoroughly economize in production and consumption. Currently, waste in production and
consumption is quite common in agencies and units. The potential for savings in production and
consumption is huge. Therefore, the Government requires state agencies to cut administrative spending
by 10%, and businesses must review all expenses to lower costs and circulation fees. The Government
calls on everyone and every home to thoroughly save on consumption, especially fuel and energy. This is
a solution that not only reduces demand pressure, reduces trade deficit, but also contributes to
improving the efficiency of the entire social production system.

Sixth, strengthen market management and control compliance with state laws on prices. Businesses of
all economic sectors must regularly check selling prices at their retail networks and retail agents. The
Government directs state-owned corporations to lead by example in implementing this requirement and
to be responsible to the Government for the operations of their businesses' retail systems and retail
agents. The Government requires industry associations to actively participate and support policies and
solutions to stabilize the market and prices.

Seventh, expand the implementation of social security policies. The Government has regulated an
increase in the minimum wage and issued policies to support ethnic minorities, policy-affiliated
households, poor households, near-poor households and fishermen. Stabilize the collection of tuition
fees, hospital fees, export rice to the national reserve to provide free of charge to households affected
by natural disasters, hunger, etc. In short, controlling inflation is not an unsolvable problem. The
problem is that it is necessary to accept certain losses for the goal of economic growth and for the
country's budget.

CHAPTER 4 . ASSESSMENT OF THE INFLATION OUTLOOK IN 2024 IN VIETNAM

inflation in Vietnam in recent years
 2021
The General Statistics Office has officially announced that the prices of oil, gas in December 2021
decreased according to the world fuel prices; the complex development of Covid-19 nationwide; tuition
fees for the first semester of the academic year 2021-2022 continue to be exempted, reduced in some
localities, leading to a 0.18% decrease in the CPI in December 2021 compared to the previous month.
Therefore, despite the upcoming Lunar New Year, the prices of goods in the market are still well
controlled, not only not increasing but also decreasing compared to the previous month. If compared
with December 2020, the CPI in December 2021 increased by 1.81%, which is also a very low increase.
Overall for the year, the CPI increased by 1.84% compared to the previous year. This is the lowest
increase since 2016. Specifically, according to the General Statistics Office, the average CPI growth rates
from 2016 to 2021 compared to the previous year are: 2.66% increase; 3.53% increase; 3.54% increase;
2.79% increase; 3.23% increase; 1.84% increase. Analyzing the market price movements in 2021, the
General Statistics Office stated that there are many reasons for the CPI increase.
Particularly noteworthy in 2021, domestic fuel prices were adjusted 22 times, with the price of A95
gasoline increasing by 6,820 VND/liter; the price of E5 gasoline increasing by 7,040 VND/liter; and the
price of diesel increasing by 5,200 VND/liter. Compared to the previous year, the average annual
domestic fuel prices increased by 31.74%, causing the overall CPI to rise by 1.14 percentage points.
Meanwhile, domestic gas prices fluctuated according to world gas prices; domestic rice prices increased
in line with export rice prices, also contributing to the overall CPI increase nationwide. Additionally,
according to the General Statistics Office, the maintenance materials for housing in 2021 increased by
7.03% compared to the previous year due to price increases in cement, iron, steel, and sand following
the price of raw materials inputs, also causing the overall CPI to increase by 0.14 percentage points.
Educational services prices in 2021 also rose by 1.87% compared to 2020, leading to a 0.1 percentage
point increase in the overall CPI. Conversely, there were also some reasons that held back the CPI
increase in 2021. Specifically, food prices in 2021 decreased by 0.54% compared to 2020, where pork
prices decreased by 10.52%; chicken prices decreased by 0.28%, leading to a 0.12 percentage point drop
in the CPI. Additionally, the Government implemented support packages for people and producers
facing difficulties due to Covid-19, including reducing electricity prices and electricity bills for customers;
the average electricity price in 2021 decreased by 0.89% compared to 2020, causing a 0.03 percentage
point decrease in the overall CPI. Moreover, the impact of Covid-19 restrictions on travel led to a 21.15%
decrease in air ticket prices in 2021 compared to the previous year, and all-inclusive travel prices
decreased by 2.32%, also contributing to the CPI decline
Furthermore, before the complex development of Covid-19, under the close guidance of the
Government, various sectors at all levels have actively implemented comprehensive solutions to prevent
the disease and stabilize market prices. This has played a significant role in controlling inflation in 2021
at a low level. From another perspective, the General Statistics Office stated that the basic inflation rate
in December 2021 increased by 0.16% compared to the previous month, and by 0.67% compared to the
same period last year. The average year of 2021, the basic inflation increased by 0.81% compared to
2020, lower than the general average CPI level (increased by 1.84%). The General Statistics Office
believes that this reflects mainly the fluctuations in consumer prices due to increases in food, gasoline,
oil, and gas prices. The basic inflation rate in 2021 compared to the previous year is also the lowest since
2011. Meanwhile, the gold price index in December 2021 increased by 0.25% compared to the previous
month; increased by 1% compared to December 2020; the average in 2021 increased by 8.67%
compared to the previous year. The US dollar price index in December 2021 increased by 0.84%
compared to the previous month; decreased by 0.58% compared to December 2020; the average in
2021 decreased by 0.97% compared to the previous year.
 2022
According to the report "Vietnam's Economy in 2022 and Prospects for 2023" released by the Central
Institute for Economic Management (CIEM), the average core inflation in 2022 increased by 2.59%,
lower than the overall inflation rate. However, the core inflation continuously increased from the third
quarter of 2022, especially in the fourth quarter of 2022. Core inflation even reached record levels of
4.47%, 4.81%, and 4.99% in October, November, and December 2022 compared to the same period in
2021. The core inflation developments in the final months of the year have exceeded the "customary"
limit of about 2% that Vietnam has been trying to maintain since 2015, higher than the core inflation at
the end of 2019 - the first half of 2020 (reaching a peak of 3.25% in January 2020; with an average of
2.31% in 2020).
However, in international comparison, Vietnam belongs to the group of economies with low CPI growth
rates. Many countries are currently facing record-high inflation levels, concentrated in Europe, Africa,
and South America, such as the European region (10%), Germany (10%), the UK (10.7%), Italy (11.8%),
Argentina (83%); Venezuela (over 80%). In the US, inflation has also reached its highest level since 1980,
reaching 9.1% in June before dropping to 7.1% in November 2022 thanks to the fastest and strongest
tightening of monetary policy in many years. According to the report, CPI increased rapidly in the second
half of 2022 due to the impact of both demand-driven factors and cost-push factors. The prices of global
commodities in many groups such as raw materials, agricultural foodstuffs continue to trend sharply
upward compared to 2021, creating significant pressure on domestic prices, especially in the categories
of petroleum, fertilizers, iron, and steel...
Specifically, the average import price index for the whole year of 2022 increased by 8.56%. Overall in
2022, domestic oil prices increased by 28.01% compared to the same period last year, causing the
general CPI to increase by 1.01 percentage points; gas prices increased by 11.49%, leading to a 0.17
percentage point increase in the general CPI; housing and construction materials increased by 3.11%
due to the higher prices of cement, iron, steel, and sand following the increase in input raw material
prices, resulting in a 0.59 percentage point increase in the general CPI. Transport and warehouse price
index also continuously increased, reflecting the increased input prices, causing difficulties for
production, business operations, and goods circulation. Disruptions in local supply for some essential
items, especially oil, at certain times (mainly concentrated in some provinces, cities in the South, then
spread to northern regions, mostly in the third and fourth quarters) have affected the time and cost of
accessing these items.
Along with that, adjusting prices of some goods and services managed by the state in the second half of
the year (the price of education services in Q4 increased by 12.09% compared to the same period last
year due to some centrally-governed provinces and cities raising tuition fees for the academic year
2022-2023, the exemption period ended, reducing tuition fees due to the impact of Covid-19 in some
places), adjusting the minimum regional wage increase from July 1, 2022 creates pressure on the CPI in
Q3, Q4. The domestic aggregate demand also increased, creating certain pressure on inflation in the
second half of 2022. The controlled Covid-19 situation has led to an increase in demand for out-of-home
dining services, tourism services, entertainment, asset accumulation, major holidays... which
significantly boosts consumer demand for goods and services, putting pressure on general price levels.
Actual growth higher than potential levels in Q2-Q3/2022 also increases pressure on domestic
commodity prices. Specifically, the import price index of 3 groups of petrol, fertilizer, iron, and steel
increased by 43.66%, 33.27%, and 20.92% respectively. In 2022, petroleum prices were adjusted 34
times, leading to a decrease of 2,590 VND/litre in A95 gasoline compared to the end of 2021; E5 gasoline
increased by 2,580 VND/litre; and diesel prices increased by 4,030 VND/litre. The index of raw materials
for production increased by 6.79% compared to the same period in 2021; 2.4 times higher than the
2.82% increase in 2021; with an increase of 5.7% in Q1, 6.38% in Q2, 5.92% in Q3, and 9.41% in Q4. The
transportation and warehouse price index increased by 3.08% in Q1 compared to the same period in
2021; by 8.17% in Q2, 12.4% in Q3, and 9.41% in Q4.
The pressure of inflation is somewhat restrained by the resolute, flexible, and focused efforts of the
government in managing. The work of removing difficulties in the domestic supply of petroleum is being
accelerated. The efforts to stabilize the exchange rate have helped reduce inflation pressure and
inflation expectations. The National Assembly and the Government have decisively reduced
environmental protection taxes on petroleum in 2022 according to the legal process, and will soon
evaluate, consider adjusting this tax rate for 2023. Emphasizing the implementation of policy
communication regularly, comprehensively, and proactively is also a contributing factor to stabilizing
inflation expectations. Communication on efforts and timely solutions to address local petroleum supply
shortages, especially in the second and third quarters, has helped alleviate concerns about high inflation
risks in the last months of the year. Along with a series of communication efforts, explanations of CPI
figures have been built according to international methods and practices..
According to CIEM, the price situation in the coming period may be directly and indirectly affected by a
number of factors. First, the trend of rising prices of raw materials, food grains in the world remains
complex, the risk of supply chain disruption still exists, while Vietnam has not yet been able to control
many important sources of inputs for production and export. Second, many countries/regions are still
facing high inflation. Third, the tightening monetary policy of the US is likely to continue until the end of
2023 to control inflation, the USD continues to put pressure on prices compared to the VND and other
key currencies, creating pressure on exchange rates, interest rates, credit, and inflation in Vietnam.
2023
In 2023, the CPI in January increased sharply by 4.89%, with very high inflationary pressure, but then
gradually decreased, reaching only 2% by June and 3.58% by December. The average inflation rate for
the whole year of 2023 was 3.25%, meeting the target set by the National Assembly. The achievement
was due to the active implementation of many solutions throughout the year, such as: reducing interest
rates for loans, stabilizing the foreign exchange market; promoting the disbursement of public
investment capital; implementing credit packages to support sectors and industries; reducing value-
added tax for certain groups of goods and services from 10% to 8% starting from July 1, 2023; reducing
environmental taxes on aviation fuel; exempting, reducing, extending taxes, fees, land use fees,
supporting businesses; extending visas for tourists; removing difficulties and obstacles in the corporate
bond market, real estate market; social security work being carefully implemented. As a result, the
market for essential goods did not experience any abnormal fluctuations, and the supply was ensured. In
addition, the prices of some items decreased according to world prices, contributing to reducing
inflationary pressure, such as the average price of oil and gas in 2023 decreased by 11.02% and 6.94%
compared to 2022, respectively. Therefore, in 2023, Vietnam successfully controlled inflation.

• Factors contributing to inflation in 2023

- The education group price index increased by 7.44% compared to the previous year due to some
localities raising tuition fees for the academic year 2023-2024 according to the roadmap of Decree No.
81/2021/NĐ-CP, impacting the general CPI increased by 0.46 percentage points.
- The housing and construction materials group price index increased by 6.58% compared to the
previous year, affecting the general CPI increase by 1.24 percentage points, due to the price increase of
cement, sand following the input material prices, along with high rental prices.
- The food group price index increased by 6.85%, affecting the general CPI to increase by 0.25
percentage points. Specifically, rice prices increased by 6.77% according to export rice prices, affecting
the general CPI to increase by 0.17 percentage points. The food price index increased by 2.33%, mainly
due to increased consumer demand during holidays and festivals, impacting the general CPI increased
by 0.5 percentage points
. - The household electricity price index increased by 4.86%, affecting the general CPI to rise by 0.16
percentage points due to increased electricity consumption from May 4, 2023, and November 9, 2023,
when EVN adjusted the average retail electricity selling price.
- The beverage and tobacco price index increased by 3.29% compared to the previous year, affecting
the general CPI to increase by 0.09 percentage points, due to increased production materials and labor
costs.
- The pharmaceuticals and medical services price index in 2023 increased by 1.23% compared to 2022
due to the adjustment of medical service prices according to Circular No. 22/2023/TT-BYT from the
Ministry of Health since November 17, 2023
. - The prices of other goods and services increased by 4.65% compared to the previous year, affecting
the CPI to rise by 0.16 percentage points, mainly from July 2023, health insurance services increased
according to the new base salary.
• The factors that decreased CPI in 2023
- The domestic gas price index in 2023 decreased by 11.02% compared to 2022 based on world price
fluctuations, reducing the general CPI by 0.4 percentage points; kerosene decreased by 10.02%.
-The gas price index decreased by 6.94% compared to 2022, reducing the general CPI by 0.1 percentage
points.
-The postal and telecommunications price index decreased by 0.81% compared to the previous year due
to a decrease in prices of old generation mobile phones.
-To proactively deal with the challenges in the face of increasing inflationary pressures, the Government
has recently directed ministries, sectors, and localities to synchronously implement solutions to stabilize
prices, limit negative impacts on socio-economic development, thereby helping to control inflation in
2023.
assessment of inflation outlook in 2024 in vietnam

Based on the Government's proposal, in Resolution No. 103/2023/QH15 on the Socio-Economic

Development Plan 2024, the National Assembly has approved the target of an average CPI growth rate
of 4-4.5%. In the context of unpredictable developments in the world and domestic economy, the
implementation of the inflation control target in 2024 will be affected by a combination of advantages
and difficulties. Some advantages can be mentioned as:

First, world inflation continues to slow down under the impact of tightening infrastructure in recent
years, supporting to reduce the price of goods imported into Vietnam, reducing domestic production
and consumption costs. In addition, the dollar is expected to trend weaker against other major
currencies as the US Federal Reserve (Fed) cuts its executive interest rate in 2024 also reduces pressure
on the domestic exchange rate, helping to curb imported inflation.

Second, domestic inflation expectations are firmly anchored when the SBV has succeeded for 12
consecutive years in controlling inflation. According to results from the SBV's Inflation Expectations
Survey conducted in December 2023, the average inflation expectation in 2024 of credit institutions and
economists will reach 3.7%, significantly lower than the target of 4-4.5%. Inflation is expected to be
firmly anchored to stabilize people's and businesses' sentiments, avoid excessive reactions when
abnormal fluctuations occur, and support the stability of domestic prices.

Third, the Government will continue to implement a number of price management and management
solutions in accordance with market developments and inflation control goals. Policies such as using the
Petroleum Price Stabilization Fund, supporting environmental tax reduction on gasoline, reducing VAT
by 2% in the first half of 2024, implementing price stabilization solutions, ensuring the supply of goods
during holidays and Tet also help reduce inflationary pressure in 2024.

However, in addition to favorable factors, the goal of controlling inflation in 2024 also faces many
difficulties and intertwined challenges from both domestic and international markets such as:

First, demand inflationary pressures pull from within the country as the economy continues to recover.
With the supporting impacts from macroeconomic policies, recovery support programs, public
investment disbursement of the Government implemented in 2023 and solutions in the coming time,
Vietnam's economic growth is expected to recover in 2024, As a result, consumer demand and
investment in the economy increase, putting pressure from the aggregate demand of the economy to
domestic commodity prices.

Second, world commodity prices fluctuate unpredictably, potentially causing many risks to increase
domestic commodity prices. According to the World Bank (November 2023), world commodity prices
next year are expected to fall by 4%, of which, both energy prices, metal prices and agricultural product
prices will decrease slightly due to a slowdown in world economic growth. However, there are still many
uncertainties in the world such as wars, geopolitical conflicts, OPEC's policy of cutting oil supply, policies
to tighten food security in many countries, climate change and extreme weather events. It could have a
sharp increase in energy, food and metal prices, thereby putting upward pressure on domestic fuel
prices.

Third, prices of products managed by the State continue to be adjusted upward according to the
roadmap. Educational service prices increased due to localities increasing tuition fees according to the
roadmap prescribed in Decree No. 81/2021/ND-CP dated August 27, 2021 of the Government stipulating
the mechanism for collecting and managing tuition for with educational institutions under the national
education system and policies on tuition exemption and reduction and support for learning costs;
Service prices in the field of education and training. Medical service prices increase according to the
instructions in Circular No. 22/2023/TT-BYT dated November 17, 2023 of the Minister of Health
regulating the uniformity of prices for medical examination and treatment services covered by health
insurance among different countries. hospitals of the same class nationwide and instructions on
applying prices and payment of medical examination and treatment costs covered by health insurance in
some cases. In addition, household electricity prices may continue to be adjusted upward when input
materials such as gasoline and coal are at high levels. The impact of increased electricity prices does not
only stop at the direct impact but can also continue to affect the price level of other goods through the
impact on production costs. Adjusting the prices of State-managed commodities is necessary, consistent
with the characteristics of a modern market economy to accurately reflect the benefit-cost relationships
between economic subjects, but will also partly increase inflationary pressure in 2024.
Fourth, the implementation of wage reform and regional minimum wage increase from July 1, 2024 will
have the effect of improving incomes of people and households, increasing spending demand and
creating domestic drawbridge inflationary pressures. In addition, the impact of wage increases in the
public sector also creates spillover sentiment to other sectors of the economy and also promotes a
faster upward adjustment in prices of other consumer goods.

Fifth, unexpected risk factors, beyond the scope of forecasting and control such as natural disasters,
epidemics, extreme weather events (drought, hail, frost...) can affect the supply and circulation of
goods, especially food items, fresh food, which can put pressure on domestic inflation at certain times.

It can be seen that the implementation of the target of controlling inflation in 2024 is intertwined with
both advantages and disadvantages. Many international organizations still believe in Vietnam's ability to
continue to succeed in controlling inflation in 2024. The International Monetary Fund (October 2023)
forecasts inflation in Vietnam at 3.43%, the World Bank (August 2023) forecasts 3%, the Asian
Development Bank (September 2023) forecasts 4%, HSBC Bank (October 2023) forecasts 3.3%. This is a
good sign that the confidence of not only domestic people and businesses but also international
organizations and foreign investors in the efficiency of macroeconomic management to control inflation
has improved significantly. However, inflation over the same period tends to increase again from mid-
2023, persistent core inflation and many potential risk factors are warnings that cannot be subjective in
macroeconomic management and management, including monetary policy management.
CONCLUDE

Inflation is the situation of increasing the prices of goods and services over a long period of time. The
main causes include increasing the money supply, excessive spending, rising raw material and production
costs along with excessive consumer demand. Inflation has a negative impact on the economy. It
devalues the currency, raises the prices of goods and services, reduces people's purchasing power,
disrupts business and investment plans, and creates instability in the business environment. To prevent
inflation, specific measures need to be taken such as controlling the money supply, controlling public
spending, or raising taxes. Additionally, improving labor productivity, increasing investment in key
sectors, promoting exports, and controlling imports also play an important role in containing inflation.
Controlling and preventing inflation is essential to ensure economic stability and protect people's lives.
Therefore, paying more attention to inflation is necessary. We need to take specific actions such as
managing personal finances, smart investing, and continually improving our knowledge of inflation to
minimize its negative impact on daily life.